Most of the people we talk to have no real idea why they would need a Personal Accident (PA) Insurance. What on earth is it? Well, PA Insurance provides protection against the consequences of big accidents, which can really impact the physical and financial aspects of your life. Below are the 4 most common benefits of PA insurance that one would expect in a PA Insurance policy in Singapore:
- Lump sum payout in case of Accidental Death
- Lump sum or weekly payout in case of Disability
- Cover for a limited amount of medical expenses
- A per day payment to cover hospital expenses
So, it is to protect yourself against a loss of your ability to work (and generate income) and unplanned expenses as a consequence of an accident.
What is an accident?
The exact definitions used will vary from one insurer to another and as a result, a particular claim can be payable in one policy but not another. The following qualifications are however quite commonly used:
- A bodily injury must have been caused solely and directly by the accident
- An accident must be sudden, unexpected or unforeseen.
- The injury must be due to a degree of violent motion
- The injury is a damage to the body – this excludes disease from natural causes (but a disease caused by accident is regarded as bodily injury unless specifically excluded by the policy).
Top 5 top benefits of PA insurance
1. Lump sum payout in case of accidental death
Death does not need to be instant. It can occur within a certain time frame (e.g. 12 months) from the accident. Compensation by the insurer is usually in the form of a lump sum payment.
2. Lump Sum payout in case of disability
As with death benefit, the PA Insurance policy will only pay lump sum benefits for disablements suffered within a limited time frame (e.g. 12 months) after an accident.
Disability is only claimable if the disablement prevents a person from engaging in any business or gainful occupation of any kind. Some examples are:
- Loss of sight of both eyes
- Loss of both limbs
- Loss of one limb and sight of one eye
- Loss of speech and hearing
Some policies also include total paralysis, incurable insanity, injuries resulting in being permanently bedridden or being unable to perform three or more Activities of Daily Living (ADLs), following an accident to constitute permanent total disablement. ADLs as specifically defined in the policy are:
3. Temporary Disablement (Total or Partial)
If an accident results in temporary total disablement, the insurer will pay weekly benefits to the insured, usually payable for up to 2 years (104 weeks). The amount is much less than the sum insured payable under permanent total disablement. Have a look at our website to compare the different payout amongst insurers.
4. Medical Expenses
Necessary and reasonable medical expenses incurred within a period of time (e.g. 12 months) to treat bodily injuries following an accident are claimable on a reimbursement basis. The cover is for up to a stated insured limit which may range from S$1,000 to S$15,000 per accident.
5. Hospital Cash
This benefit comes in the form of a fixed daily benefit (e.g. S$100 per day) based on the duration of hospital stay irrespective of the actual medical bill. It is usually subject to a period limit (e.g. 90 days). Only hospitalisation due to accidents and not for other medical reasons are covered.
So is it worthwhile?
Do you really need Personal Accident Insurance? We would argue that if your quality of life is very dependent on the regular income from you as a breadwinner then you definitely do. If you are wealthy and are not dependent on income from employment or your own business, then the need to cover against loss of income is less, but you and your dependent may still benefit from the payout to cover the extra costs arising from your accident or disability such as funeral arrangements in the worst case to adjustment to your house or car in case of a disability.
There are big differences among what insurers offer and we really recommend you to compare policies side by side on our Insurance Market platform. This comparison helps you to get a good feel for what they offer and what you are buying. This helps to avoid dispute when you least want it and ensures you get good value for money.